Monday, 19 June 2017

Higher education, big big numbers

I don't think we can blame the consultants for this one.

Normally, big big numbers in economic impact reports are a black mark on the consultancy producing them. They don't come with enough health warnings, and the misleading big big figures draw headlines too easily.

Dave Guerin's Ed Insider newsletter (essential reading for anybody following tertiary ed in New Zealand) covers the Universities NZ report, produced by NZIER. He writes:
Universities NZ released Regional activity of universities (30 pages) on 27 Apr 2017 (UNZ media release).
  • The report had straightforward analysis of the direct university spending and employment in their region, and the contribution to regional GDP.
  • NZIER also estimated the indirect and induced expenditure due to universities, but placed major caveats on those figures, stating that UNZ had specifically asked for them. They noted that the government did not see such numbers as a credible argument for increased government expenditure on universities. NZIER repeated their 2-paragraph warning 9 times in the report, and added an appendix with more detail on the issue.
  • Universities NZ cited the largest number possible ($19.95b) in their media release.
For an example of a nice health warning, here's a bit from NZIER's Exec Summary:
Estimating the size of these indirect and induced effects in a way that is economically meaningful is problematic. They can be estimated using multipliers that try to reflect the ripple effects of university expenditure on the economy, but this approach makes so many assumptions that the estimates should be seen as indicative only. The multiplier analysis approach (used in the mid-2000s but now discredited) massively overstates the indirect and induced economic activity attributable to any industry because it fails to consider alternative uses for the resources employed by the industry. At best, multiplier based estimates of indirect and induced effects are a measure of the current footprint of the university in the city/region. They cannot be added to calculate a national total across cities/regions and they are not accepted by central government as a credible argument for increased expenditure on university education or R&D.

Though indirect and induced effects are estimated in this report they should be seen as indicative only. See Appendix A for further caveats and comments on indirect and induced effects.
Pretty blunt. When clients use the big big numbers, even when the reports have health warnings as blunt as these are... yikes.

Sunday, 18 June 2017

Farewell Molly Malone

Courtney Place pub Molly Malone's was damaged in last year's earthquake. The building is old, but not heritage-listed. So it fortunately can be demolished, as the owners wish.

"In this case, the building has been identified by the council as earthquake prone … [and] the applicant contends that the building 'is a clear and present danger to the public'."

In addition, the owners planned to fill the space in the interim, and eventually rebuild, meaning any effects on the streetscape would be temporary, Hayes said.

However, the council's senior heritage advisor Vanessa Tanner opposed the demolition.

She said that while the build was not heritage listed, it had significance in terms of the build and social context.

Heritage New Zealand also weighed in, saying the loss of the Molly Malones building was regrettable due to both the heritage qualities of the building and its place in more recent social history.

[Council Senior consents planner Lisa] Hayes said there were no rules preventing its demolition as it was not a heritage building.

"While I acknowledged the advice of Ms Tanner that there will be an adverse heritage effect associated with this loss, this will be a public effect and needs to be balanced with the risk to public safety if the unsafe building is to be retained," Hayes said.

Saturday, 17 June 2017

Diversity in the metastudy

Wharton's Katherine Klein has a nice literature review up on the effects of corporate boardroom gender diversity.

The bottom line seems to be no effect.

Klein usefully contrasts consultancy reports on the topic with the findings of the academic literature:
Do companies with women on the board perform better than companies whose boards are all-male? Many popular press articles and fund managers make this claim, citing studies by consulting firms, information providers and financial institutions, such as McKinsey, Thomson Reuters and Credit Suisse.

Writing recently on Huffington Post, for example, one consultant observed the following:
“Companies with gender-diverse management teams have been proven to consistently perform better and be more profitable than those without them. There is overwhelming evidence to support the value of having more women in senior leadership positions. A growing body of research –including studies by McKinsey & Company — has proven that companies with more women in senior executive and board roles have advantages over those that don’t.”
But research conducted by consulting firms and financial institutions is not as rigorous as peer-reviewed academic research. Here, I dig into the findings of rigorous, peer-reviewed studies of the relationship between board gender diversity and company performance.

Spoiler alert: Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. Nor do they perform worse. Depending on which meta-analysis you read, board gender diversity either has a very weak relationship with board performance or no relationship at all.
That's consistent with my read of things as well. But be careful here too: there being no relationship doesn't mean that quotas or mandates would be costless. You'd need to specifically sort through the studies that looked at effects of quotas, because changes in board composition that are board initiated might differ from ones that are compulsory.

Previously: Wishful Treasury Thinking

Friday, 16 June 2017

Afternoon roundup

Some highlights from the closing of the browser tabs:

Cartel's gonna cartel

Canada's dairy cartel continues to impress. After Canada negotiated increased access to Canadian markets for European cheesemakers, the dairy cartel managed to do this:
Under the terms of the Comprehensive Economic and Trade Agreement (CETA), Canada has agreed to allow nearly 18,000 additional tonnes of European cheese to be imported tariff free.

But CBC News has learned that when Canadian officials briefed their European counterparts on how they would allocate the quota for importing this new cheese, not everyone around Europe's cabinet table felt Canada's approach lived up to the spirit of the negotiations.

A European official, speaking on the condition of anonymity because he was not authorized to speak, characterized the state of things as a "row."

Canadians haven't been transparent enough about several aspects of CETA's implementation, the source said, and presented the cheese quota decision as a non-negotiable fait accompli. It was a final straw for upset Europeans who had been otherwise eager to get on with the deal.

The source said Canada informed the EU that 60 per cent of the new import quota would go to domestic dairy producers and processors. Europeans fear they won't use it, so fewer new cheeses compete with their domestic products.

If the quota's unused, or there's any incentive to delay imports, Europe could be effectively denied the market access it fought for years to get. CETA provides a way for complaints like this to be resolved, but Europeans would prefer not to have to sue Canada after the fact, the source said.
Emphasis added. So opening up to greater access to European cheeses gives the bulk of that import quota to the existing dairy cartel. Recall that rather a few of Canada's dairy processors are cooperatives owned by quota-holding Canadian dairy farmers; I've not seen anything on how that 60% gets split. If a decent chunk goes to the companies that haven't quota interests, maybe it wouldn't be so bad.

But still: more reasons to be skeptical about the merits of including Canada in free trade deals if trade in agricultural goods matters.

Thursday, 15 June 2017

Dispatches from the Asylum

Canada considers taxing broadband internet services to fund Canadian Content.
A Liberal-dominated committee will be calling for a 5-per-cent tax on broadband Internet services to fund Canada’s media industries, which are struggling to adapt to technological changes and evolving consumer habits, sources said.

The move would add hundreds of millions of dollars in revenues to the Canadian Media Fund, which already receives a levy on cable bills to finance the production of Canadian content. However, it would open up the government to accusations that it is once again raising taxes on consumers.

Liberal and opposition sources said the new levy is the central proposal in the majority report of the Canadian Heritage Committee of the House of Commons, which will be released on Thursday. The sources spoke on condition of anonymity as the report is not yet public.
If there's some public good case for funding the creation of Canadian content, the burden of providing the public good should fall through the tax system on the public at large.
The Liberal proposal for a new levy would build on the current 5-per-cent charge on cable and satellite TV bills across the country, sources said.

A source explained the revenue stream generated by the current cable levy is no longer sufficient in an age of cord cutting and “over-the-top” services that stream content over the Internet.

Under the new proposal, an additional tax would be levied on “broadband Internet providers.” It would ideally apply to high-speed Internet services that allow for the streaming of music, movies and TV shows, but not to slower and less costly services, the source said.

As such, proponents of the proposal are branding it as a “streaming tax rather than an Internet tax,” designed to bring the existing cable-based system in line with recent technological changes.

“People will say it’s a new tax, but it isn’t a new tax,” a source said. “The goal is to update the current levy on cable companies to include other services that they now also provide.”
It isn't a tax. It's just a compulsory fee levied on a particular consumption good, with the money going to the government. That's totally different from a tax.

We don't know how lucky we are in New Zealand... a continuing series.... 

Kiwi kid outcomes

UNICEF's new report has made for some damning headlines about child outcomes in New Zealand. In a few cases the critique is deserved; in a few others, it needs a bit of context.

UNICEF finds that fewer New Zealand live in relative income poverty than is the OECD average, in 2014 data. It is worth remembering that there is a sharp gap between those figures as measured before- and after- housing costs. If relative income poverty is measured after taking into account the costs of housing, the proportion of children in relative income poverty rises by about a third according to Ministry of Social Development 2015 figures. Since housing costs are a more substantial problem in New Zealand than in most other countries surveyed, UNICEF may be understating the seriousness of the problem in New Zealand as they appear to be using before housing cost figures. But it is a bit difficult to tell, since none of their numbers match up with the MSD figures.

In many cases, New Zealand is not included in international comparison because New Zealand’s figures are not reported in ways that make international comparisons easy. But we can usefully look to the closest available New Zealand measures.

UNICEF leaves New Zealand out of its measure of multidimensional hardship. MSD’s 2015 figures had material hardship, by the EU-13 standard, below the EU or OECD median when measured for the population as a whole, but slightly above it when measured for those aged below 17. This is due in part to New Zealand’s decision to provide more substantial income transfers to the elderly, through superannuation, than to children. Unfortunately, New Zealand’s figures on material deprivation only go back to 2007. The proportion of children both income poor and materially deprived rose during the GFC and has since returned to roughly pre-GFC levels. Figure G.6 in Perry is copied below.

Similarly, while there is no recent official data on youth (aged 11-15 years) alcohol abuse, recent trends for those aged 15-18 have shown substantial declines in youth drinking. In the 2006/7 survey, 74.5% of youths aged 15-17 reported having consumed alcohol in the prior year; by 2014/15, that had dropped to 57.1%. New Zealand’s overall progress towards UNICEF’S Goal 3 around healthy lives may then be understated – though New Zealand’s very high youth suicide rates rightly are highlighted as well.

UNICEF’s figures also understate the dramatic reduction in teenage birth rates in New Zealand. Statistics New Zealand reports that, in 2016, there were approximately 16 births for every woman aged 15-19 in New Zealand; UNICEF’s figures put it at 23. New Zealand’s teenage birth rate has roughly halved since 2008.

The report worryingly points to that 16% of New Zealand children live in households in which no adult reports being in work. This is especially poor performance where employment rates in New Zealand are much higher than in most OECD countries, and are at or near all-time highs in the available New Zealand data.

New Zealand fares relatively poorly on an aggregate measure of inequality that UNICEF constructs from two measures of income inequality, and one measure of the role of socioeconomic differences in school performance. All of New Zealand’s poor showing is due to poor outcomes for children in lower decile schools; New Zealand is at or around mean of reported countries on the other two measures. Lifting performance in poorly performing schools should be a priority.

If the government’s investment approach to improving social outcomes is successful, New Zealand’s standing in UNICEF’s ranking should show improvement within the next few years.

I had initially prepared these comments for Newsroom's Shane Cowlishaw. His story on it's here; I hadn't known he was on a 5pm deadline and got this through a bit too late to make it in.